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In 2026, solar leases and PPAs are more competitive than ever. With the residential ITC dead (Section 25D expired Dec 2025), cash buyers get no federal credit. But lease/PPA companies still claim the commercial ITC (Section 48), passing savings to you through lower payments. Many homeowners now save more with a lease than buying outright.
The residential solar tax credit died on December 31, 2025. If you buy solar with cash or a loan, you get $0 from the federal government. But solar lease and PPA companies still claim the 30% commercial ITC (Section 48/48E) and pass those savings to you through lower monthly payments. For many homeowners, leasing is now the smarter financial move.
$0
Cash/Loan ITC
30%
Lease/PPA ITC
Day 1
Lease Savings
Jul 4, 2026
Deadline
Quick Answer
In 2026, solar leases and PPAs are more competitive than ever. With the residential ITC dead (Section 25D expired Dec 2025), cash buyers get no federal credit. But lease/PPA companies still claim the commercial ITC (Section 48), passing savings to you through lower payments. Many homeowners now save more with a lease than buying outright.
On December 31, 2025, Section 25D of the federal tax code expired. This was the residential solar Investment Tax Credit (ITC) that gave homeowners a 30% credit on their tax return when they purchased solar panels. For over a decade, this credit was the primary financial incentive for buying solar. It is gone. If you buy solar with cash or a loan in 2026, you receive $0 in federal tax credits.
But Section 48/48E -- the commercial and investment tax credit -- is still alive. It provides the same 30% credit, but it goes to the entity that owns the solar system. When a lease or PPA company owns the panels on your roof, that company claims the credit and passes the savings to you through lower monthly payments. This is not a loophole. Congress designed Section 48/48E specifically to incentivize solar deployment by any qualifying entity.
Federal Government
Section 48/48E
30% ITC
Tax credit
Lease/PPA Company
System owner
Lower Payments
Savings passed through
You
Day 1 savings
This is the single biggest shift in residential solar financing since the Inflation Reduction Act was signed in 2022. For the first time in over a decade, leasing and PPAs are financially competitive with buying -- because the ITC advantage that cash buyers had is gone. The playing field has leveled, and in many scenarios, third-party ownership now wins on year-one economics.
How every solar financing option stacks up now that the residential ITC is dead. Based on a typical 8 kW system at $3.25/W.
| Factor | Cash Purchase | Solar Loan | Solar Lease | PPA |
|---|---|---|---|---|
| Upfront cost | $25,000-35,000 | $0 | $0 | $0 |
| Federal ITC | $0 (25D dead) | $0 (25D dead) | Company claims 48/48E | Company claims 48/48E |
| Monthly payment | $0 | $150-250 | $80-150 fixed | Varies (per kWh) |
| Year 1 savings | High (no payment) | Moderate | $20-60/month | $20-80/month |
| 25-year savings | Highest | High | Moderate | Moderate |
| Ownership | You own | You own (after loan) | Company owns | Company owns |
| Maintenance | Your responsibility | Your responsibility | Included | Included |
| Home sale impact | Increases value | Increases value | Transfer or buyout | Transfer or buyout |
Before 2026, buying solar with cash was the clear financial winner -- the 30% tax credit knocked roughly $8,000 off a $27,000 system, making the effective cost just $19,000. That math is dead. Cash buyers now pay full price with no federal offset. Meanwhile, lease and PPA companies still capture the 30% credit through Section 48/48E and bake those savings into your lower monthly payment. The result: the gap between leasing and buying has narrowed dramatically, and for homeowners who value $0 down, zero maintenance, and immediate savings, leasing is now the stronger short-term play.
The death of the residential ITC does not make one option universally best. Your ideal financing depends on your financial situation, time horizon, and priorities. Here is our decision framework.
Understanding the economics behind a solar lease or PPA helps you evaluate whether the deal makes sense. Here is exactly how the money flows.
A financing company (the third-party owner) purchases solar panels, inverters, and racking at wholesale cost. They hire an installer -- like NuWatt -- to put the system on your roof. The system cost is typically $25,000-$35,000 for a residential installation.
Because the company legally owns the system, it claims the 30% Investment Tax Credit under Section 48/48E. On a $30,000 system, that is $9,000 back from the IRS. The company also claims MACRS accelerated depreciation (5-year schedule + 20% bonus in 2026), which provides additional tax savings of roughly $5,000-$8,000.
The company does not pocket these tax benefits. The $9,000+ ITC plus depreciation savings are what allow the company to offer you a monthly payment that is 20-40% lower than your current electric bill. Without these tax benefits, the company could not offer such low rates.
Your savings equation is simple. If your electric bill is $200/month and your lease payment is $120/month, you save $80/month from day one. The system owner handles all maintenance, monitoring, and warranty claims for the life of the agreement.
Before 2026, a cash buyer could claim the same 30% credit as the lease company -- meaning buying was almost always financially superior. Now that homeowners get $0 credit, the lease company has a structural advantage: it still captures the 30% ITC plus depreciation benefits that are only available to business entities. These tax benefits are literally impossible for a homeowner to access through a cash or loan purchase. The lease/PPA model is the only way for a residential customer to benefit from federal solar incentives in 2026.
Your savings depend heavily on your local electricity rate. Higher rates mean a bigger gap between your utility bill and your lease payment -- and bigger monthly savings for you.
Estimates based on a typical 8 kW system. Lease payments reflect 2026 market rates from major TPO providers.
| State | Avg Electric Rate | Typical Lease | Monthly Savings | 25-Year Savings |
|---|---|---|---|---|
| Massachusetts | $0.28/kWh | $120/mo | $60-80/mo | $18,000-24,000 |
| Connecticut | $0.27/kWh | $115/mo | $55-75/mo | $16,500-22,500 |
| Rhode Island | $0.29/kWh | $125/mo | $65-85/mo | $19,500-25,500 |
| New Hampshire | $0.27/kWh | $110/mo | $50-70/mo | $15,000-21,000 |
| New Jersey | $0.26/kWh | $105/mo | $45-65/mo | $13,500-19,500 |
| Pennsylvania | $0.18/kWh | $80/mo | $15-25/mo | $4,500-7,500 |
| Maine | $0.27/kWh | $110/mo | $50-70/mo | $15,000-21,000 |
| Vermont | $0.22/kWh | $90/mo | $25-40/mo | $7,500-12,000 |
| Texas | $0.15/kWh | $75/mo | $10-25/mo | $3,000-7,500 |
The pattern is clear: higher electricity rates = bigger lease savings. In high-rate states like Massachusetts, Rhode Island, and Connecticut, solar leases can save homeowners $60-85 per month from day one. In lower-rate states like Texas and Pennsylvania, savings are more modest but still positive. The key question is not whether leasing saves money -- it is how much.
We hear these questions every day. Here are honest, data-backed answers.
No. Research from Zillow shows solar homes sell for 4.1% more on average. When you sell, you either transfer the lease to the new buyer (most welcome the savings -- the process takes 2-4 weeks) or exercise your buyout option before closing. In competitive real estate markets, a solar lease with built-in savings is an attractive feature, not a liability.
Most solar leases have buyout options starting at year 6 or 7 at fair market value. You can also transfer the agreement when selling your home. With NuWatt Propel (available in ME + TX), ownership transfers to you automatically at year 5 with no buyout fee. You are not trapped -- you have options.
The lease or PPA company owns the system and is responsible for all maintenance, monitoring, repairs, and warranty claims for the life of the agreement. If an inverter fails, a panel underperforms, or a critter chews a wire, the company fixes it at no cost to you. This is one of the biggest advantages of leasing versus buying.
Electricity rates in the U.S. have risen 3-6% annually for over a decade. Grid infrastructure costs, fuel price volatility, and increasing demand from EVs and heat pumps all push rates higher. No credible energy forecast projects sustained rate decreases. Your locked-in lease rate becomes more valuable each year as utility rates continue to climb.
Most solar financing forces you to choose: own the system (but lose the ITC in 2026) or lease it (but never own it). NuWatt's Propel program eliminates this tradeoff with a hybrid model designed specifically for the post-ITC landscape.
No upfront cost. Your 25-year loan with Concert Finance covers everything.
A third-party owner holds the system for years 1-5 and claims the 30% Section 48/48E credit. That savings is baked into your lower payment.
After the 5-year ITC recapture period, full ownership transfers to you -- no buyout fee required.
Propel requires Silfab 440W panels, which meet Foreign Entity of Concern requirements for Section 48/48E eligibility.
The third-party owner guarantees system performance and covers all maintenance for the first 5 years.
Because the ITC is factored in, your monthly payment is 15-25% lower than a standard solar loan.
Propel is currently available in Maine and Texas. Expanding to additional states in 2026.
See If You Qualify for PropelSection 48/48E is the last federal solar incentive available to homeowners through third-party ownership. Projects must begin construction before July 4, 2026. Start the process now to lock in your savings before the deadline.